Abstract: On Thursday, the Organization for Economic Co-operation and Development said that France’s economic growth this year will be the highest since 2011. The OECD raised the French economic growth forecast, which is the first time the organization has conducted an in-depth assessment of the country's economy since the French President Mark Long took office.
On Thursday, the Organization for Economic Co-operation and Development said that this year's French economic growth will hit its highest since 2011. The OECD raised the French economic growth forecast, which is the first time the organization has conducted an in-depth assessment of the country's economy since the French President Mark Long took office.
Although OECD is watching the reform plan of Mark Long, it also said that there is a need for a long-term plan to cut public spending. French public spending is the highest among the 35 member states of the OECD.
The OECD said in its 150-page report that the French economy, which grew only 1.1% last year, is expected to grow 1.7% this year, the highest growth rate since 2011, but still lags behind the euro zone average.
The OECD also said that France's economic growth rate is expected to fall slightly to 1.6% next year, but it is still higher than the estimate in June. The OECD's previous estimates for June are expected to be 1.3% and 1.5% for France's economic growth in 2017 and 2018, respectively.
The OECD also said that in order to reduce debt and pay for long-term labor tax credits, France needs to gradually reduce public spending to cope with its long-term financial situation. At present, public expenditure in France accounts for more than 56% of GDP.
France is expected to make little progress in cutting public sector deficits. The OECD estimates that the French public sector deficit to GDP ratio will fall to 2.9% from 3.0% this year. The French government's goal is to fall to 2.7% in 2018.
French President Mark Long plans to cut 20 billion euros ($23.8 billion) in spending next year, but most of the savings will be offset by spending cuts in priority areas such as tax cuts and higher education.
The OECD called on the Markron government to focus on gradually reducing the proportion of pension expenditures to economic output and cutting public sector payroll, especially by merging local government agencies.
France's average retirement age is the lowest among OECD countries, and the OECD specifically recommends that the minimum retirement age be gradually raised from the current 62-year-old.
In the plan to comprehensively reform the employment system next year, Mark Long did not intend to raise the retirement age, but the increasing financial pressure may make him have no choice.
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